A new service should be launched to help half a million of the country's lowest paid workers improve their skills, according to a new report.
Employment group Working Links said helping low-paid workers better their career prospects should be a Government priority.
The report, published ahead of the latest unemployment figures, called for a new fund to be established to allow groups of local authorities to trial ways of boosting productivity and living standards.
Stephen Evans of Working Links, which helps to deliver Government jobs schemes, said: "Living standards are falling dramatically and in real terms, with people struggling to get by as prices rise faster than their wages.
"At the same time, our jobs market is becoming more polarised with fewer middle-ranking roles to which entry-level workers can aspire.
"We need to change this. We need to provide better support for helping people to advance their careers, as well as to find and keep work. Our report provides a clarion call for action and clear, costed proposals to make a difference.
"It's also important that Government schemes to help get people back to work, not only try and keep them there but help them move up the career ladder too. This will create more jobs and keep the economy growing."
Last month's unemployment figures showed a fall of 49,000 to 2.5 million, although the number of people claiming jobseeker's allowance increased by 10,000 to 1.58 million.
